Multiple Policies in Quick Succession Using Name Variants Indicates Awareness of Illness: CDRC Mysore Rejects Claim Against LIC
Pranav B Prem
The District Consumer Disputes Redressal Commission, Mysore (Karnataka), comprising Smt. A.K. Naveen Kumari (President), Smt. M.K. Lalitha (Member), and Sri Maruthi Vaddar (Member), has dismissed a complaint filed against the Life Insurance Corporation of India (LIC) for repudiation of a life insurance claim. The Commission held that when multiple insurance policies are obtained within a short duration using different variations of names and through different agents, it suggests a deliberate intent to suppress material facts. In such cases, repudiation of the claim is legally justified.
Background
The complaint was filed by Smt. Uma Maheshwari, daughter of the deceased insured, Sri Mahadevappa alias Nagaraju. The deceased had taken two insurance policies from LIC on the same day—23.05.2019—under the Jeevan Anand Plan. One policy was for a sum assured of ₹2,00,000, and another for ₹1,50,000. The nominee under both policies was the Complainant. After paying three premiums for each policy, the insured passed away on 27.03.2020, reportedly due to natural causes. Following his death, the Complainant submitted a claim form to LIC. However, LIC repudiated the claim on the grounds of non-disclosure of a pre-existing illness by the insured.
Aggrieved by the rejection, the Complainant initially approached the Hon’ble High Court of Karnataka, which disposed of the writ petition and granted liberty to the Complainant to pursue appropriate remedies before the Consumer Commission. Consequently, the present consumer complaint was filed.
LIC’s Defense
LIC admitted that the deceased had taken the two insurance policies and nominated the Complainant. However, they asserted that both policies were issued within a span of less than two months, and the claim was made within three years of the policy commencement. Therefore, under Section 45 of the Insurance Act, 1938, the insurer was within its rights to investigate and repudiate the claim if it discovered material suppression.
LIC submitted that the deceased had failed to disclose a critical pre-existing illness at the time of submitting the proposal forms. Specifically, the insured had a history of Chronic Liver Disease with Portal Hypertension and Massive Ascites, among other complications. The insurer produced hospital records confirming that the insured was admitted to Vivekananda Memorial Hospital multiple times prior to the issuance of the policies. LIC maintained that the failure to disclose such material health conditions amounted to fraud and justified the repudiation.
Findings of the Commission
The Commission closely examined the medical documents submitted by LIC, including hospital admission and discharge summaries. The records revealed that the deceased had been admitted to hospital on 04.02.2019 and 11.04.2019—before the insurance policies were taken—where he was diagnosed with severe liver-related conditions. Additionally, a third admission occurred in November 2019, confirming further complications, including Hepatorenal Syndrome and Septic Shock.
The Commission also noted that the deceased obtained four insurance policies within a three-month period, using multiple variations of his name—Nagaraju, Mahadevappa, and Nagaraju alias Mahadevappa—and involved three different agents. Two policies listed his wife as nominee, while the other two listed his daughter. This strategic approach raised significant doubts regarding the intent of the insured.
Referring to the Supreme Court decision in Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, the Commission reiterated that: “A contract of insurance is one of utmost good faith. Suppression of any material fact such as a pre-existing disease amounts to breach of the duty of disclosure and renders the contract voidable.”
The Commission found that the deceased had answered "No" to all medical-related questions in the proposal form, despite being admitted to hospitals for serious health conditions both shortly before and after the dates of insurance proposals. This clearly indicated suppression of material facts.
Verdict
The Commission concluded that the act of taking multiple insurance policies in a short span, using different names and different agents, after becoming aware of a critical illness, demonstrated an intention to secure insurance fraudulently. It held that LIC had rightly repudiated the claims based on material suppression and there was no deficiency of service on its part. Accordingly, the complaint was dismissed. No compensation or sum assured was granted to the Complainant.
Appearance
For the Complainant: Adv. Naveen Kumar.M.H.
For the Opposite Party (s): Adv. S.Vageesh
Cause Title: Uma Maheshwari V. Zonal Manager, LIC of India & 2 Ors.
Case No: CC No. 164/2024
Coram: Smt.A.K. Naveen Kumari [President], Smt.M.K. Lalitha [Member], Sri.Maruthi Vaddar [Member]
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